Question

Find the value of an IBM mainframe computer after 5 years if the initial value was $1,250,000 and the computer is depreciating at a rate of 17.5% a year. Show the formula you use.

Answer 1

To find the value of an IBM mainframe computer after 5 years with an initial value of $1,250,000 and a depreciation rate of 17.5% per year, use the formula: Value after n years = Initial value × (1 - Depreciation rate)^n. Plugging in the values, the value after 5 years is $567,750.

Step-by-step explanation:

To find the value of an IBM mainframe computer after 5 years with an initial value of $1,250,000 and a depreciation rate of 17.5% per year, we can use the formula:

Value after n years = Initial value × (1 - Depreciation rate)^n

Plugging in the values:

Value after 5 years = $1,250,000 × (1 - 0.175)^5

Calculating the result:

Value after 5 years = $1,250,000 × 0.825^5

Value after 5 years = $1,250,000 × 0.453

Value after 5 years = $567,750